WAGE RATES AND PRICES UNDER THE NRA
If we are right in believing that the most important effects of the NRA from a recovery standpoint were the changes in costs and prices which it occasioned, some measurement of these changes constitutes a preliminary step in the appraisal of its results. As a background for this undertaking, let us first consider briefly the situation at the time the NRA was launched.
One of the reasons frequently advanced to justify the broad-gauged campaign of wage raising which the NRA conducted was the acute shrinkage in labor income during the depression. From this it was inferred that the general level of wage rates had been excessively reduced and that restorative measures were called for.
That the total payments of wages and salaries declined sharply during the depression is not in itself evidence that hourly wage rates were inordinately reduced. The falling off in total payments reflected not only a scaling down of wage rates but a shrinkage in the number of workers employed and a curtailment of working time for those still on the payrolls. The wage-rate reductions were therefore far less drastic than the decline in total labor income, and of course cannot be measured by it.
Before we attempt to gauge the extent of these reductions in wage rates it is appropriate to ask by what test we may determine whether they were excessive. The